What changed in this filing

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Item 1. Financial Statements

2023-05-05 compared with 2022-11-04 · 153 added, 263 removed, 643 unchanged (39% of the section changed)

3 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

(in millions, except per share data) 2023 2022

4 unchanged sentences

Acquired IPR&D and milestones 150 145

Other operating expense, net 229 500 57 432

Other operating income ( 10 ) —

Total operating costs and expenses 9,457 8,821

21 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

(in millions) 2023 2022

Net earnings $ 241 $ 4,493

Foreign currency translation adjustments, net of tax expense (benefit) of $( 11 ) for the three months and $( 30 ) for the nine months ended September 30, 2022 and $( 8 ) for the three months and $( 32 ) for the nine months ended September 30, 2021

( 989 ) ( 361 ) ( 2,043 ) ( 794 )

Net investment hedging activities, net of tax expense (benefit) of $ 165 for the three months and $ 348 for the nine months ended September 30, 2022 and $ 51 for the three months and $ 123 for the nine months ended September 30, 2021

599 184 1,265 444

Pension and post-employment benefits, net of tax expense (benefit) of $ 14 for the three months and $ 35 for the nine months ended September 30, 2022 and $ 17 for the three months and $ 50 for the nine months ended September 30, 2021

Foreign currency translation adjustments, net of tax expense (benefit) of $ 12 for the three months ended March 31, 2023 and $( 7 ) for the three months ended March 31, 2022

Net investment hedging activities, net of tax expense (benefit) of $( 60 ) for the three months ended March 31, 2023 and $ 37 for the three months ended March 31, 2022

Pension and post-employment benefits, net of tax expense (benefit) of $ 14 for the three months ended March 31, 2023 and $ 10 for the three months ended March 31, 2022

Cash flow hedging activities, net of tax expense (benefit) of $( 4 ) for the three months ended March 31, 2023 and $( 2 ) for the three months ended March 31, 2022

( 41 ) ( 12 )

Cash flow hedging activities, net of tax expense (benefit) of $ 14 for the three months and $ 17 for the nine months ended September 30, 2022 and $ 13 for the three months and $ 16 for the nine months ended September 30, 2021

Other comprehensive loss ( 33 ) ( 85 )

7 unchanged sentences

Condensed Consolidated Balance Sheets

(in millions, except share data) September 30,

(in millions, except share data) March 31,

2023 December 31,

23 unchanged sentences

Stockholders' equity

Common stock, $ 0.01 par value, 4,000,000,000 shares authorized, 1,812,973,038 shares issued as of September 30, 2022 and 1,803,195,293 as of December 31, 2021

Common stock held in treasury, at cost, 44,572,117 shares as of September 30, 2022 and 34,857,597 as of December 31, 2021

Common stock, $ 0.01 par value, 4,000,000,000 shares authorized, 1,821,082,016 shares issued as of March 31, 2023 and 1,813,770,294 as of December 31, 2022

Common stock held in treasury, at cost, 57,113,024 shares as of March 31, 2023 and 44,589,000 as of December 31, 2022

( 6,524 ) ( 4,594 )

11 unchanged sentences

(in millions) Common shares outstanding Common stock Treasury stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Noncontrolling interest Total

Balance at June 30, 2021 1,767 $ 18 $ ( 3,022 ) $ 17,936 $ 740 $ ( 3,103 ) $ 25 $ 12,594

Net earnings attributable to AbbVie Inc.

— — — — 3,179 — — 3,179

Other comprehensive loss, net of tax — — — — — ( 53 ) — ( 53 )

Dividends declared — — — — ( 2,319 ) — — ( 2,319 )

Purchases of treasury stock — — ( 6 ) — — — — ( 6 )

Stock-based compensation plans and other 1 — 8 172 — — — 180

Change in noncontrolling interest — — — — — — 2 2

Balance at September 30, 2021 1,768 $ 18 $ ( 3,020 ) $ 18,108 $ 1,600 $ ( 3,156 ) $ 27 $ 13,577

Balance at June 30, 2022 1,768 $ 18 $ ( 4,591 ) $ 18,906 $ 3,516 $ ( 3,196 ) $ 35 $ 14,688

Net earnings attributable to AbbVie Inc.

— — — — 3,949 — — 3,949

Other comprehensive loss, net of tax — — — — — ( 247 ) — ( 247 )

Dividends declared — — — — ( 2,512 ) — — ( 2,512 )

Purchases of treasury stock — — ( 4 ) — — — — ( 4 )

Stock-based compensation plans and other — — 5 150 — — — 155

Change in noncontrolling interest — — — — — — ( 2 ) ( 2 )

Balance at September 30, 2022 1,768 $ 18 $ ( 4,590 ) $ 19,056 $ 4,953 $ ( 3,443 ) $ 33 $ 16,027

Balance at December 31, 2021 1,768 $ 18 $ ( 3,143 ) $ 18,305 $ 3,127 $ ( 2,899 ) $ 28 $ 15,436

6 unchanged sentences

Change in noncontrolling interest — — — — — — 3 3

Balance at September 30, 2021 1,768 $ 18 $ ( 3,020 ) $ 18,108 $ 1,600 $ ( 3,156 ) $ 27 $ 13,577

Balance at March 31, 2022 1,767 $ 18 $ ( 4,585 ) $ 18,731 $ 5,103 $ ( 2,984 ) $ 31 $ 16,314

Balance at December 31, 2022 1,769 $ 18 $ ( 4,594 ) $ 19,245 $ 4,784 $ ( 2,199 ) $ 33 $ 17,287

6 unchanged sentences

Change in noncontrolling interest — — — — — — ( 4 ) ( 4 )

Balance at September 30, 2022 1,768 $ 18 $ ( 4,590 ) $ 19,056 $ 4,953 $ ( 3,443 ) $ 33 $ 16,027

Balance at March 31, 2023 1,764 $ 18 $ ( 6,524 ) $ 19,619 $ 2,393 $ ( 2,232 ) $ 29 $ 13,303

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

Condensed Consolidated Statements of Cash Flows (unaudited)

Nine months ended

September 30,

Three months ended

(in millions) (brackets denote cash outflows) 2023 2022

8 unchanged sentences

Acquired IPR&D and milestones 150 145

Other charges related to collaborations — 500

Gain on divestitures ( 172 ) ( 68 )

Non-cash litigation reserve adjustments, net of cash payments 2,261 21

Impairment of intangible assets 710 —

41 unchanged sentences

Net revenues and net earnings for any interim period are not necessarily indicative of future or annual results.

During the three months ended March 31, 2022, AbbVie revised its classification of development milestone expense associated with licensing and collaboration arrangements in the consolidated statement of earnings.

Milestone payments incurred prior to regulatory approval, which were previously included in research and development expense, are now presented as acquired IPR&D and milestones expense.

The reclassification decreased research and development expense and increased acquired IPR&D and milestones expense by $ 12 million for the three months and $ 162 million for the nine months ended September 30, 2021.

The company believes this presentation assists users of the financial statements to better understand the total upfront and subsequent development milestone payments incurred to acquire in-process research and development projects.

Prior periods have been reclassified to conform to the current period presentation.

The reclassification had no impact on total operating costs and expenses, operating earnings, net earnings, net earnings attributable to AbbVie, Inc., earnings per share, or total equity.

Certain other reclassifications were made to conform the prior period interim condensed consolidated financial statements to the current period presentation.

2 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

(in millions) 2023 2022

2 unchanged sentences

Interest expense, net $ 454 $ 539

(in millions) September 30,

(in millions) March 31,

2023 December 31,

3 unchanged sentences

Inventories $ 3,833 $ 3,579

2022 Form 10-Q |

Property and Equipment, Net

(in millions) September 30,

(in millions) March 31,

2023 December 31,

2 unchanged sentences

Property and equipment, net $ 4,931 $ 4,935

Depreciation expense was $ 181 million for the three months and $ 582 million for the nine months ended September 30, 2022 and $ 223 million for the three months and $ 630 million for the nine months ended September 30, 2021.

Depreciation expense was $ 179 million for the three months ended March 31, 2023 and $ 198 million for the three months ended March 31, 2022.

2023 Form 10-Q |

Note 3 Earnings Per Share

4 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

(in millions, except per share data) 2023 2022

18 unchanged sentences

Note 4 Licensing, Acquisitions and Other Arrangements

Cash outflows related to acquisitions and investments totaled $ 494 million for the nine months ended September 30, 2022 and $ 837 million for the nine months ended September 30, 2021.

AbbVie recorded acquired IPR&D and milestones expense of $ 40 million for the three months and $ 454 million for the nine months ended September 30, 2022 and $ 402 million for the three months and $ 719 million for the nine months ended September 30, 2021.

Other Licensing & Acquisitions Activity

Cash outflows related to acquisitions and investments totaled $ 353 million for the three months ended March 31, 2023 and $ 185 million for the three months ended March 31, 2022.

AbbVie recorded acquired IPR&D and milestones expense of $ 150 million for the three months ended March 31, 2023 and $ 145 million for the three months ended March 31, 2022.

Syndesi Therapeutics SA

1 unchanged sentence

SDI-118 is a small molecule currently in Phase 1b studies, which is being evaluated to target nerve terminals to enhance synaptic efficiency.

Under the terms of the agreement, AbbVie made an upfront payment of $ 130 million which was recorded to acquired IPR&D and milestones expense in the

2022 Form 10-Q |

condensed consolidated statement of earnings in the first quarter of 2022.

Under the terms of the agreement, AbbVie made an upfront payment of $ 130 million which was recorded to acquired IPR&D and milestones expense in the condensed consolidated statement of earnings in the first quarter of 2022.

The agreement also includes additional future payments of up to $ 870 million upon the achievement of certain development, regulatory and commercial milestones.

Juvise Pharmaceuticals

In June 2022, AbbVie and Laboratories Juvise Pharmaceuticals (Juvise) entered into an asset purchase agreement where Juvise acquired worldwide commercial rights of a mature brand Pylera, which is used for the treatment of peptic ulcers with an infection by the bacterium Helicobacter pylori.

The transaction was accounted for as the sale of an asset.

Upon completion of the transaction, AbbVie received net cash proceeds of $ 215 million and recognized a pre-tax gain of $ 172 million which was recorded in other operating income in the condensed consolidated statement of earnings in the second quarter of 2022.

DJS Antibodies Ltd

Subsequent to September 30, 2022, AbbVie entered into an agreement to acquire DJS Antibodies Ltd (DJS) including its lead program DJS-002 and proprietary HEPTAD platform.

DJS-002 is an LPAR1 antagonist antibody currently in preclinical studies for the treatment of Idiopathic Pulmonary Fibrosis and other fibrotic diseases.

HEPTAD platform is a potential novel approach to antibody discovery with specific capabilities targeting transmembrane protein targets.

Under the terms of the agreement, AbbVie will make an upfront payment of approximately $ 255 million plus additional future payments of up to $ 95 million upon achievement of certain development milestones.

Calico Life Sciences LLC

In July 2021, AbbVie and Calico Life Sciences LLC (Calico) entered into an extension of their collaboration to discover, develop and bring to market new therapies for patients with age-related diseases, including neurodegeneration and cancer.

This is the second collaboration extension and builds on the partnership established in 2014 and extended in 2018.

Under the terms of the agreement, AbbVie and Calico will each contribute an additional $ 500 million and the term is extended for an additional three years.

AbbVie’s contribution is payable in two equal installments beginning in 2023.

Calico will be responsible for research and early development until 2025 and will advance collaboration projects into Phase 2a through 2030.

Following completion of the Phase 2a studies, AbbVie will have the option to exclusively license the collaboration compounds.

Upon exercise, AbbVie would be responsible for late-stage development and commercial activities.

Collaboration costs and profits will be shared equally by both parties post option exercise.

During the third quarter of 2021, AbbVie recorded $ 500 million as other operating expense in the condensed consolidated statement of earnings related to its commitments under the agreement.

TeneoOne and TNB-383B

In September 2021, AbbVie acquired TeneoOne, an affiliate of Teneobio, Inc., and TNB-383B, a BCMA-targeting immunotherapeutic for the potential treatment of relapsed or refractory multiple myeloma (R/R MM).

In February 2019, AbbVie and TeneoOne entered a strategic transaction to develop and commercialize TNB-383B, a bispecific antibody that simultaneously targets BCMA and CD3 and is designed to direct the body's own immune system to target and kill BCMA-expressing tumor cells.

AbbVie exercised its exclusive right to acquire TeneoOne and TNB-383B based on an interim analysis of an ongoing Phase 1 study and accounted for the transaction as an asset acquisition.

Under the terms of the agreement, AbbVie made an exercise payment of $ 400 million which was recorded to acquired IPR&D and milestones expense in the condensed consolidated statement of earnings in the third quarter of 2021.

The agreement also included additional payments of up to $ 250 million upon the achievement of certain development, regulatory and commercial milestones.

Other Arrangements

AbbVie entered into several other arrangements resulting in charges related to upfront payments of $ 132 million for the three months ended March 31, 2023.

Acquired IPR&D and milestones expense also included development milestones of $ 18 million for the three months ended March 31, 2023 and $ 15 million for the three months ended March 31, 2022.

2023 Form 10-Q |

Note 5 Collaborations

The company has ongoing transactions with other entities through collaboration agreements.

The following represent the significant collaboration agreements impacting the periods ended September 30, 2022 and 2021.

The following represent the significant collaboration agreements impacting the periods ended March 31, 2023 and 2022.

Collaboration with Janssen Biotech, Inc.

1 unchanged sentence

and its affiliates (Janssen), one of the Janssen Pharmaceutical companies of Johnson & Johnson, for the joint development and commercialization of Imbruvica, a novel, orally active, selective covalent inhibitor of Bruton’s tyrosine kinase and certain compounds structurally related to Imbruvica, for oncology and other indications, excluding all immune and inflammatory mediated diseases or conditions and all psychiatric or psychological diseases or conditions, in the United States and outside the United States.

2022 Form 10-Q |

The collaboration provides Janssen with an exclusive license to commercialize Imbruvica outside of the United States and co-exclusively with AbbVie in the United States.

15 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

(in millions) 2023 2022

2 unchanged sentences

Global - AbbVie's share of other costs (included in respective line items) 55 64

AbbVie’s receivable from Janssen, included in accounts receivable, net, was $ 296 million at September 30, 2022 and $ 294 million at December 31, 2021.

AbbVie’s payable to Janssen, included in accounts payable and accrued liabilities, was $ 379 million at September 30, 2022 and $ 509 million at December 31, 2021.

AbbVie’s receivable from Janssen, included in accounts receivable, net, was $ 267 million at March 31, 2023 and $ 295 million at December 31, 2022.

AbbVie’s payable to Janssen, included in accounts payable and accrued liabilities, was $ 293 million at March 31, 2023 and $ 379 million at December 31, 2022.

Collaboration with Genentech, Inc.

8 unchanged sentences

Royalties paid for Venclexta revenues outside the United States are also included in AbbVie’s cost of products sold.

2023 Form 10-Q |

The following table shows the profit and cost sharing relationship between Genentech and AbbVie:

Three months ended

September 30, Nine months ended

September 30,

(in millions) 2023 2022

3 unchanged sentences

AbbVie's share of development costs (included in R&D) 28 27

2022 Form 10-Q |

Note 6 Goodwill and Intangible Assets

3 unchanged sentences

Foreign currency translation adjustments 64

Balance as of September 30, 2022 $ 31,726

Balance as of March 31, 2023 $ 32,220

The company performs its annual goodwill impairment assessment in the third quarter, or earlier if impairment indicators exist.

As of September 30, 2022, there were no accumulated goodwill impairment losses.

As of March 31, 2023, there were no accumulated goodwill impairment losses.

Intangible Assets, Net

The following table summarizes intangible assets:

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

(in millions) Gross

10 unchanged sentences

Definite-Lived Intangible Assets

Amortization expense was $ 2.0 billion for the three months and $ 5.7 billion for the nine months ended September 30, 2022 and $ 1.9 billion for the three months and $ 5.9 billion for the nine months ended September 30, 2021.

Amortization expense was $ 1.9 billion for the three months ended March 31, 2023 and 2022.

Amortization expense was included in cost of products sold in the condensed consolidated statements of earnings.

In September 2022, the company made a strategic decision to reduce ongoing sales and marketing investment related to Vuity, an on-market product to treat presbyopia.

This strategic decision contributed to a significant decrease in the estimated future cash flows for the product and represented a triggering event which required the company to evaluate the underlying definite lived-intangible asset for impairment.

The company utilized a discounted cash flow analysis to estimate the fair value of the intangible asset resulting in a full impairment of both the gross and net carrying amount.

Based on the revised cash flows, the company recorded a pre-tax impairment charge of $ 770 million to cost of products sold in the condensed consolidated statement of earnings for the third quarter of 2022.

The company monitors intangible assets for impairment on a quarterly basis.

The definite-lived intangible asset related to Imbruvica in the United States has a carrying value of $ 4.8 billion as of March 31, 2023.

Estimated future cash flows are not significantly higher than the intangible asset’s carrying value, reflecting the company’s current expectations of the impact of the Inflation Reduction Act of 2022.

Future changes to the company’s estimates of the impact of the Inflation Reduction Act and the potential of government selection for price negotiations as well as regulatory, market and competitive developments could unfavorably impact the company’s ability to recover the carrying value of the related intangible asset.

It is reasonably possible that an intangible asset impairment may occur in future periods, which may have a material effect on AbbVie’s results of operations.

2023 Form 10-Q |

Indefinite-Lived Intangible Assets

Indefinite-lived intangible assets represent in-process research and development associated with products that have not yet received regulatory approval.

Indefinite-lived intangible assets represent acquired IPR&D associated with products that have not yet received regulatory approval.

The company performs its annual impairment assessment of indefinite-lived intangible assets in the third quarter, or earlier if impairment indicators exist.

During the first quarter of 2023, the company made a decision to revise the research and development plan for AGN-151607, a novel investigational neurotoxin for the prevention of postoperative atrial fibrillation in cardiac surgery patients.

This decision contributed to a delay in the estimated timing of regulatory approval as well as a significant decrease in estimated future cash flows of the product and represented a triggering event which required the company to evaluate the underlying indefinite-lived intangible asset for impairment.

The company utilized a discounted cash flow analysis to estimate the fair value which was below the carrying value of the intangible asset.

Based on the revised cash flows, the company recorded a pre-tax impairment charge of $ 630 million to research and development expense in the condensed consolidated statement of earnings for the first quarter of 2023.

Note 7 Integration and Restructuring Plans

Allergan Integration Plan

Following the closing of the Allergan acquisition, AbbVie implemented an integration plan designed to reduce costs, integrate and optimize the combined organization.

To achieve these integration objectives, AbbVie expects to incur total cumulative charges of approximately $ 2 billion through 2022.

Following the closing of the Allergan acquisition, AbbVie implemented an integration plan designed to reduce costs, integrate and optimize the combined organization and incurred total cumulative charges of $ 2.3 billion through March 31, 2023 .

These costs consist of severance and employee benefit costs (cash severance, non-cash severance including accelerated equity award compensation expense, retention and other termination benefits) and other integration expenses.

2022 Form 10-Q |

The following table summarizes the charges (benefits) associated with the Allergan acquisition integration plan:

Severance and employee benefits Other integration

Three months ended

September 30, Nine months ended

September 30, Three months ended

September 30, Nine months ended

September 30,

(in millions) 2023 2022

3 unchanged sentences

Total charges $ 58 $ 110

The following table summarizes the cash activity in the recorded liability associated with the Allergan integration plan for the nine months ended September 30, 2022:

(in millions) Severance and employee benefits Other integration

The following table summarizes the cash activity in the recorded liability associated with the Allergan integration plan for the three months ended March 31, 2023:

(in millions)

Accrued balance as of December 31, 2022

Charges 2 316

Payments and other adjustments ( 69 )

Accrued balance as of September 30, 2022 $ 117 $ 6

Accrued balance as of March 31, 2023 $ 96

Other Restructuring

AbbVie recorded restructuring charges of $ 50 million for the three months and $ 143 million for the nine months ended September 30, 2022 and $ 13 million for the three months and $ 56 million for the nine months ended September 30, 2021.

The following table summarizes the cash activity in the restructuring reserve for the nine months ended September 30, 2022:

AbbVie recorded restructuring charges of $ 27 million for the three months ended March 31, 2023 and $ 57 million for the three months ended March 31, 2022.

The following table summarizes the cash activity in the restructuring reserve for the three months ended March 31, 2023:

(in millions)

2 unchanged sentences

Payments and other adjustments ( 24 )

Accrued balance as of September 30, 2022 $ 120

Accrued balance as of March 31, 2023 $ 169

2023 Form 10-Q |

Note 8 Financial Instruments and Fair Value Measures

3 unchanged sentences

Various AbbVie foreign subsidiaries enter into foreign currency forward exchange contracts to manage exposures to changes in foreign exchange rates for anticipated intercompany transactions denominated in a currency other than the functional currency of the local entity.

These contracts, with notional amounts totaling $ 1.8 billion at September 30, 2022 and $ 1.1 billion at December 31, 2021, are designated as cash flow hedges and are recorded at fair value.

These contracts, with notional amounts totaling $ 1.7 billion at March 31, 2023 and December 31, 2022, are designated as cash flow hedges and are recorded at fair value.

The durations of these forward exchange contracts were generally less than 18 months.

Accumulated gains and losses as of September 30, 2022 are reclassified from accumulated other comprehensive income (loss) (AOCI) and included in cost of products sold at the time the products are sold, generally not exceeding six months from the date of settlement.

In the third quarter of 2019, the company entered into treasury rate lock agreements with notional amounts totaling $ 10.0 billion to hedge exposure to variability in future cash flows resulting from changes in interest rates related to the issuance of long-term debt in connection with the acquisition of Allergan.

Accumulated gains and losses as of March 31, 2023 are reclassified from accumulated other comprehensive income (loss) (AOCI) and included in cost of products sold at the time the products are sold, generally not exceeding six months from the date of settlement.

In 2019, the company entered into treasury rate lock agreements with notional amounts totaling $ 10.0 billion to hedge exposure to variability in future cash flows resulting from changes in interest rates related to the issuance of long-term debt in connection with the acquisition of Allergan.

The treasury rate lock agreements were designated as cash flow hedges and recorded at fair value.

The agreements were net settled upon issuance of the senior notes in November 2019 and the resulting net gain was recognized in other comprehensive loss.

The agreements were net settled upon issuance of the senior notes in 2019 and the resulting net gain was recognized in other comprehensive loss.

This gain is reclassified to interest expense, net over the term of the related debt.

2022 Form 10-Q |

The company is a party to interest rate swap contracts designated as cash flow hedges with notional amounts totaling $ 750 million at September 30, 2022 and December 31, 2021.

The effect of the hedge contracts is to change a floating-rate interest obligation to a fixed rate for that portion of the floating-rate debt.

Realized and unrealized gains or losses are included in AOCI and are reclassified to interest expense, net over the lives of the floating-rate debt.

The company was a party to interest rate swap contracts designated as cash flow hedges that matured in November 2022.

The effect of the hedge contracts was to change a floating-rate interest obligation to a fixed rate for that portion of the floating-rate debt.

Realized and unrealized gains or losses were included in AOCI and are reclassified to interest expense, net over the lives of the floating-rate debt.

The company also enters into foreign currency forward exchange contracts to manage its exposure to foreign currency denominated trade payables and receivables and intercompany loans.

1 unchanged sentence

Resulting gains or losses are reflected in net foreign exchange gain or loss in the condensed consolidated statements of earnings and are generally offset by losses or gains on the foreign currency exposure being managed.

These contracts had notional amounts totaling $ 6.8 billion at September 30, 2022 and $ 8.2 billion at December 31, 2021.

These contracts had notional amounts totaling $ 7.8 billion at March 31, 2023 and $ 6.5 billion at December 31, 2022.

The company also uses foreign currency forward exchange contracts or foreign currency denominated debt to hedge its net investments in certain foreign subsidiaries and affiliates.

The company had foreign currency forward exchange contracts designated as net investment hedges with notional amounts totaling € 4.5 billion at September 30, 2022 and € 4.3 billion at December 31, 2021.

The company also had an aggregate principal amount of senior Euro notes designated as net investment hedges of € 5.9 billion at September 30, 2022 and December 31, 2021.

The company had an aggregate principal amount of senior Euro notes designated as net investment hedges of € 5.9 billion at March 31, 2023 and December 31, 2022.

In addition, the company had foreign currency forward exchange contracts designated as net investment hedges with notional amounts totaling € 4.3 billion, SEK 2.2 billion, CAD 750 million and CHF 70 million at March 31, 2023 and € 4.3 billion, SEK 2.0 billion, CAD 750 million and CHF 90 million at December 31, 2022.

The company uses the spot method of assessing hedge effectiveness for derivative instruments designated as net investment hedges.

Realized and unrealized gains and losses from these hedges are included in AOCI and the initial fair value of hedge components excluded from the assessment of effectiveness is recognized in interest expense, net over the life of the hedging instrument.

The company is a party to interest rate swap contracts designated as fair value hedges with notional amounts totaling $ 4.5 billion at September 30, 2022 and December 31, 2021.

The company is a party to interest rate swap contracts designated as fair value hedges with notional amounts totaling $ 6.0 billion at March 31, 2023 and $ 4.5 billion at December 31, 2022.

The effect of the hedge contracts is to change a fixed-rate interest obligation to a floating rate for that portion of the debt.

1 unchanged sentence

No amounts are excluded from the assessment of effectiveness for cash flow hedges or fair value hedges.

2023 Form 10-Q |

The following table summarizes the amounts and location of AbbVie’s derivative instruments on the condensed consolidated balance sheets:

1 unchanged sentence

Derivatives in liability position

(in millions) Balance sheet caption September 30, 2022 December 31, 2021 Balance sheet caption September 30, 2022 December 31, 2021

(in millions) Balance sheet caption March 31, 2023 December 31, 2022 Balance sheet caption March 31, 2023 December 31, 2022

Foreign currency forward exchange contracts

5 unchanged sentences

Interest rate swap contracts

Designated as cash flow hedges Prepaid expenses and other 2 — Accounts payable and accrued liabilities — 7

Designated as fair value hedges Prepaid expenses and other — — Accounts payable and accrued liabilities 17 17

2 unchanged sentences

While certain derivatives are subject to netting arrangements with the company’s counterparties, the company does not offset derivative assets and liabilities within the condensed consolidated balance sheets.

2022 Form 10-Q |

The following table presents the pre-tax amounts of gains (losses) from derivative instruments recognized in other comprehensive loss:

Three months ended

September 30, Nine months ended

September 30,

(in millions) 2023 2022

3 unchanged sentences

Interest rate swap contracts designated as cash flow hedges — 4

Assuming market rates remain constant through contract maturities, the company expects to reclassify pre-tax gains of $ 150 million into cost of products sold for foreign currency cash flow hedges, pre-tax gains of $ 2 million into interest expense, net for interest rate swap cash flow hedges and pre-tax gains of $ 24 million into interest expense, net for treasury rate lock agreement cash flow hedges during the next 12 months.

Related to AbbVie’s non-derivative, foreign currency denominated debt designated as net investment hedges, the company recognized in other comprehensive loss pre-tax gains of $ 431 million for three months and pre-tax gains of $ 932 million for the nine months ended September 30, 2022 and pre-tax gains of $ 141 million for the three months and pre-tax gains of $ 397 million for the nine months ended September 30, 2021.

Assuming market rates remain constant through contract maturities, the company expects to reclassify pre-tax gains of $ 46 million into cost of products sold for foreign currency cash flow hedges and pre-tax gains of $ 24 million into interest expense, net for treasury rate lock agreement cash flow hedges during the next 12 months.

Related to AbbVie’s non-derivative, foreign currency denominated debt designated as net investment hedges, the company recognized in other comprehensive loss pre-tax losses of $ 162 million for the three months ended March 31, 2023 and pre-tax gains of $ 99 million for the three months ended March 31, 2022.

2023 Form 10-Q |

The following table summarizes the pre-tax amounts and location of derivative instrument net gains (losses) recognized in the condensed consolidated statements of earnings, including the net gains (losses) reclassified out of AOCI into net earnings.

1 unchanged sentence

Three months ended

September 30, Nine months ended

September 30,

(in millions) Statement of earnings caption 2023 2022

13 unchanged sentences

• Level 3 – Valuations using significant inputs that are unobservable in the market and include the use of judgment by the company’s management about the assumptions market participants would use in pricing the asset or liability.

2022 Form 10-Q |

The following table summarizes the bases used to measure certain assets and liabilities carried at fair value on a recurring basis on the condensed consolidated balance sheet as of September 30, 2022:

The following table summarizes the bases used to measure certain assets and liabilities carried at fair value on a recurring basis on the condensed consolidated balance sheet as of March 31, 2023:

Basis of fair value measurement

13 unchanged sentences

Total liabilities $ 18,475 $ — $ 544 $ 17,931

2023 Form 10-Q |

The following table summarizes the bases used to measure certain assets and liabilities carried at fair value on a recurring basis on the condensed consolidated balance sheet as of December 31, 2022:

7 unchanged sentences

Equity securities 91 59 32 —

Interest rate swap contracts 26 — 26 —

Foreign currency contracts 163 — 163 —

5 unchanged sentences

Money market funds and time deposits are valued using relevant observable market inputs including quoted prices for similar assets and interest rate curves.

Equity securities consist of investments for which the fair values were determined by using the published market price per unit multiplied by the number of units held, without consideration of transaction costs.

Equity securities primarily consist of investments for which the fair values were determined by using the published market prices per unit multiplied by the number of units held, without consideration of transaction costs.

The derivatives entered into by the company were valued using observable market inputs including published interest rate curves and both forward and spot prices for foreign currencies.

The fair value measurements of contingent consideration liabilities were determined based on significant unobservable inputs, including the discount rate, estimated probabilities and timing of achieving specified development, regulatory and commercial milestones and the estimated amount of future sales of the acquired products.

Potential contingent consideration payments are estimated by applying a probability-weighted expected payment model for contingent milestone payments and a Monte Carlo simulation model for contingent royalty payments, which are then discounted to present value.

Changes to the fair value of the contingent consideration liabilities can result from changes to one or a number of inputs, including discount rates, probabilities of

2022 Form 10-Q |

achieving the milestones, time required to achieve the milestones and estimated future sales.

The fair value measurements of the contingent consideration liabilities were determined based on significant unobservable inputs, including the discount rate, estimated probabilities and timing of achieving specified development, regulatory and commercial milestones and the estimated amount of future sales of the acquired products.

The potential contingent consideration payments are estimated by applying a probability-weighted expected payment model for contingent milestone payments and a Monte Carlo simulation model for contingent royalty payments, which are then discounted to present value.

Changes to the fair value of the contingent consideration liabilities can result from changes to one or a number of inputs, including discount rates, the probabilities of achieving the milestones, the time required to achieve the milestones and estimated future sales.

Significant judgment is employed in determining the appropriateness of certain of these inputs.

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The fair value of the company's contingent consideration liabilities was calculated using the following significant unobservable inputs:

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

(in millions) Range Weighted average (a)

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Probability of payment for unachieved milestones 100 % - 100 %

100 % - 100 %

Probability of payment for royalties by indication (b)

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(a) Unobservable inputs were weighted by the relative fair value of the contingent consideration liabilities.

(b) Excluding approved indications, the estimated probability of payment ranged from 56 % to 89 % at September 30, 2022 and December 31, 2021.

(b) Excluding approved indications, the estimated probability of payment was 89 % at March 31, 2023 and 56 % at December 31, 2022.

2023 Form 10-Q |

There have been no transfers of assets or liabilities into or out of Level 3 of the fair value hierarchy.

The following table presents the changes in fair value of total contingent consideration liabilities which are measured using Level 3 inputs:

Nine months ended

September 30,

Three months ended

(in millions) 2023 2022

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Certain financial instruments are carried at historical cost or some basis other than fair value.

The book values, approximate fair values and bases used to measure the approximate fair values of certain financial instruments as of September 30, 2022 are shown in the table below:

The book values, approximate fair values and bases used to measure the approximate fair values of certain financial instruments as of March 31, 2023 are shown in the table below:

Basis of fair value measurement

7 unchanged sentences

Total liabilities $ 62,407 $ 58,578 $ 57,761 $ 817 $ —

2022 Form 10-Q |

The book values, approximate fair values and bases used to measure the approximate fair values of certain financial instruments as of December 31, 2022 are shown in the table below:

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The company records these investments at cost and remeasures them to fair value based on certain observable price changes or impairment events as they occur.

The carrying amount of these investments was $ 143 million as of September 30, 2022 and $ 149 million as of December 31, 2021.

No significant cumulative upward or downward adjustments have been recorded for these investments as of September 30, 2022.

The carrying amount of these investments was $ 115 million as of March 31, 2023 and $ 129 million as of December 31, 2022.

No significant cumulative upward or downward adjustments have been recorded for these investments as of March 31, 2023.

Concentrations of Risk

Of total net accounts receivable, three U.S.

wholesalers accounted for 79 % as of September 30, 2022 and 75 % as of December 31, 2021, and substantially all of AbbVie’s pharmaceutical product net revenues in the United States were to these three wholesalers.

Humira (adalimumab) is AbbVie’s single largest product and accounted for approximately 36 % of AbbVie’s total net revenues for the nine months ended September 30, 2022 and 37 % for the nine months ended September 30, 2021.

wholesalers accounted for 77 % as of March 31, 2023 and 82 % as of December 31, 2022, and substantially all of AbbVie’s pharmaceutical product net revenues in the United States were to these three wholesalers.

2023 Form 10-Q |

Humira (adalimumab) is AbbVie’s single largest product and accounted for approximately 29 % of AbbVie’s total net revenues for the three months ended March 31, 2023 and 35 % for the three months ended March 31, 2022.

Debt and Credit Facilities

Long-Term Debt

In January 2023, the company repaid a $ 1.0 billion floating rate three-year term loan that was scheduled to mature in May 2023.

In March 2023, the company repaid a $ 350 million aggregate principal amount of 2.80 % senior notes at maturity.

In January 2022, the company repaid $ 2.9 billion aggregate principal amount of 3.45 % senior notes that were scheduled to mature in March 2022.

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All other significant terms of the loan, including the maturity date, remained unchanged after the refinancing.

In July 2022, the company repaid $ 1.7 billion aggregate principal amount of 3.25 % senior notes that were scheduled to mature in October 2022.

This repayment was made by exercising, under the terms of the notes, 90-day early redemption at 100% of the principal amount.

In September 2022, the company repaid $ 1.0 billion aggregate principal amount of 3.2 % senior notes that were scheduled to mature in November 2022.

This payment was made by exercising, under the terms of the notes, 60-day early redemption at 100% of the principal amount.

In April 2021, the company repaid $ 1.8 billion aggregate principal amount of 2.3 % senior notes that were scheduled to mature in May 2021.

In May 2021, the company repaid € 750 million aggregate principal amount of 0.5 % senior euro notes that were scheduled to mature in June 2021.

These repayments were made by exercising, under the terms of the notes, 30-day early redemptions at 100% of the principal amounts.

The company also repaid $ 750 million aggregate principal amount of floating rate senior notes at maturity in May 2021.

In September 2021, the company refinanced its $ 1.0 billion floating rate three-year term loan.

As part of the refinancing, the company repaid the existing $ 1.0 billion term loan due May 2023 and borrowed $ 1.0 billion under a new term loan at a lower floating rate.

All other significant terms of the loan, including the maturity date, remained unchanged after the refinancing.

In September 2021, the company repaid $ 1.2 billion aggregate principal amount of 5.0 % senior notes that were scheduled to mature in December 2021.

This repayment was made by exercising, under the terms of the notes, 90-day early redemption at 100% of the principal amount.

2022 Form 10-Q |

Short-Term Borrowings

In March 2023, AbbVie entered into an amended and restated five-year revolving credit facility.

The amendment increased the unsecured revolving credit facility commitments from $ 4.0 billion to $ 5.0 billion and extended the maturity date of the facility from August 2023 to March 2028.

This amended facility enables the company to borrow funds on an unsecured basis at variable interest rates and contains various covenants.

At March 31, 2023, the company was in compliance with all covenants, and commitment fees under the credit facility were insignificant.

No amounts were outstanding under the company's credit facilities as of March 31, 2023 and December 31, 2022.

Note 9 Post-Employment Benefits

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Three months ended

September 30, Nine months ended

September 30, Three months ended

September 30, Nine months ended

September 30,

March 31, Three months ended

(in millions) 2023 2022 2023 2022

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The components of net periodic benefit cost other than service cost are included in other expense (income), net in the condensed consolidated statements of earnings.

2023 Form 10-Q |

Note 10 Equity

Stock-Based Compensation

In May 2021, stockholders of the company approved the AbbVie Amended and Restated 2013 Incentive Stock Program (the Amended Plan), which amends and restates the AbbVie 2013 Incentive Stock Program.

Stock-based compensation expense is principally related to awards issued pursuant to the AbbVie 2013 Incentive Stock Program and the Amended Plan and is summarized as follows:

Stock-based compensation expense is principally related to awards issued pursuant to the AbbVie 2013 Incentive Stock Program and the AbbVie Amended and Restated 2013 Incentive Stock Program and is summarized as follows:

Three months ended

September 30, Nine months ended

September 30,

(in millions) 2023 2022

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Stock Options

During the nine months ended September 30, 2022, primarily in connection with the company's annual grant, AbbVie granted 0.9 million stock options with a weighted-average grant-date fair value of $ 22.83 .

As of September 30, 2022, $ 8 million of unrecognized compensation cost related to stock options is expected to be recognized as expense over approximately the next two years .

During the three months ended March 31, 2023, primarily in connection with the company's annual grant, AbbVie granted 0.6 million stock options with a weighted-average grant-date fair value of $ 29.95 .

As of March 31, 2023, $ 10 million of unrecognized compensation cost related to stock options is expected to be recognized as expense over approximately the next two years .

RSUs and Performance Shares

During the nine months ended September 30, 2022, primarily in connection with the company's annual grant, AbbVie granted 5.9 million RSUs and performance shares with a weighted-average grant-date fair value of $ 146.30 .

As of September 30, 2022, $ 692 million of unrecognized compensation cost related to RSUs and performance shares is expected to be recognized as expense over approximately the next two years .

2022 Form 10-Q |

During the three months ended March 31, 2023, primarily in connection with the company's annual grant, AbbVie granted 5.6 million RSUs and performance shares with a weighted-average grant-date fair value of $ 149.74 .

As of March 31, 2023, $ 924 million of unrecognized compensation cost related to RSUs and performance shares is expected to be recognized as expense over approximately the next two years .

Cash Dividends

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Shares repurchased under this program are recorded at acquisition cost, including related expenses, and are available for general corporate purposes.

AbbVie repurchased 8 million shares for $ 1.1 billion during the nine months ended September 30, 2022 and 5 million shares for $ 550 million during the nine months ended September 30, 2021.

AbbVie's remaining stock repurchase authorization was approximately $ 1.4 billion as of September 30, 2022.

On February 16, 2023, AbbVie’s board of directors authorized a $ 5.0 billion increase to the existing stock repurchase authorization.

AbbVie repurchased 10 million shares for $ 1.6 billion during the three months ended March 31, 2023 and 8 million shares for $ 1.1 billion during the three months ended March 31, 2022.

AbbVie's remaining stock repurchase authorization was approximately $ 4.8 billion as of March 31, 2023.

2023 Form 10-Q |

Accumulated Other Comprehensive Loss

The following table summarizes the changes in each component of accumulated other comprehensive loss, net of tax, for the nine months ended September 30, 2022:

The following table summarizes the changes in each component of accumulated other comprehensive loss, net of tax, for the three months ended March 31, 2023:

(in millions) Foreign currency

6 unchanged sentences

Other comprehensive income (loss) before reclassifications 194 ( 202 ) 40 ( 10 ) 22

Net losses (gains) reclassified from accumulated other comprehensive loss — ( 53 ) 130 ( 53 ) 24

Net gains reclassified from accumulated other comprehensive loss — ( 22 ) ( 2 ) ( 31 ) ( 55 )

Net current-period other comprehensive income (loss) 194 ( 224 ) 38 ( 41 ) ( 33 )

Balance as of September 30, 2022 $ ( 2,613 ) $ 1,174 $ ( 2,410 ) $ 406 $ ( 3,443 )

Other comprehensive loss for the nine months ended September 30, 2022 included foreign currency translation adjustments totaling a loss of $ 2.0 billion and the offsetting impact of net investment hedging activities totaling a gain of $ 1.3 billion, which were principally due to the impact of the weakening of the Euro on the translation of the company’s Euro-denominated assets.

The following table summarizes the changes in each component of accumulated other comprehensive loss, net of tax, for the nine months ended September 30, 2021:

Balance as of March 31, 2023 $ ( 1,319 ) $ 240 $ ( 1,420 ) $ 267 $ ( 2,232 )

Other comprehensive loss for the three months ended March 31, 2023 included foreign currency translation adjustments totaling a gain of $ 194 million principally due to the impact of the strengthening of the Euro on the translation of the company’s Euro-denominated asset and the offsetting impact of net investment hedging activities totaling a loss of $ 224 million.

The following table summarizes the changes in each component of accumulated other comprehensive loss, net of tax, for the three months ended March 31, 2022:

(in millions) Foreign currency

8 unchanged sentences

Net current-period other comprehensive income (loss) ( 231 ) 130 28 ( 12 ) ( 85 )

Balance as of September 30, 2021 $ ( 211 ) $ ( 346 ) $ ( 2,871 ) $ 272 $ ( 3,156 )

Other comprehensive loss for the nine months ended September 30, 2021 included foreign currency translation adjustments totaling a loss of $ 794 million and the offsetting impact of net investment hedging activities totaling a gain of $ 444 million, which were principally due to the impact of the weakening of the Euro on the translation of the company’s Euro-denominated assets.

Balance as of March 31, 2022 $ ( 801 ) $ 39 $ ( 2,518 ) $ 296 $ ( 2,984 )

Other comprehensive loss for the three months ended March 31, 2022 included foreign currency translation adjustments totaling a loss of $ 231 million principally due to the impact of the weakening of the Euro on the translation of the company’s Euro-denominated asset and the offsetting impact of net investment hedging activities totaling a gain of $ 130 million.

2023 Form 10-Q |

1 unchanged sentence

Three months ended

September 30, Nine months ended

September 30,

(in millions) (brackets denote gains) 2023 2022

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Amortization of actuarial losses and other (b)

$ 55 $ 71 $ 166 $ 214

Tax benefit — ( 12 )

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Gains on treasury rate lock agreements (a)

( 6 ) ( 6 ) ( 18 ) ( 18 )

Losses on interest rate swap contracts (a)

5 unchanged sentences

Note 11 Income Taxes

The effective tax rate was 10 % for the three months and 11 % for the nine months ended September 30, 2022 compared to 14 % for the three and nine months ended September 30, 2021 .

The effective tax rate was 49 % for the three months ended March 31, 2023 compared to 9 % for the three months ended March 31, 2022.

The effective tax rate in each period differed from the U.S.

statutory tax rate of 21 % principally due to the impact of foreign operations which reflects the impact of lower income tax rates in locations outside the United States, tax incentives in Puerto Rico and other foreign tax jurisdictions, business development activities and accretion on contingent consideration.

The decrease in the effective tax rate for the three and nine months ended September 30, 2022 over the prior year was primarily due to differences in the company’s jurisdictional mix of earnings, accretion on contingent consideration, and acquired IPR&D and milestones.

statutory tax rate of 21 % principally due to the impact of foreign operations which reflects the impact of lower income tax rates in locations outside the United States, changes in fair value of contingent consideration and business development activities.

The increase in the effective tax rate for the three months ended March 31, 2023 over the prior year was primarily due to changes in fair value of contingent consideration, tax law changes in Puerto Rico and impairment of certain intangible assets.

Due to the potential for resolution of federal, state and foreign examinations and the expiration of various statutes of limitations, it is reasonably possible that the company’s gross unrecognized tax benefits balance may change within the next 12 months by up to $ 110 million.

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Lawsuits are pending against AbbVie and others generally alleging that the 2005 patent litigation settlement involving Niaspan entered into between Kos Pharmaceuticals, Inc.

(a company acquired by Abbott in 2006 and presently a subsidiary of AbbVie) and a generic company violates federal and state antitrust laws and state unfair and deceptive trade practices and unjust enrichment laws.

(a company acquired by Abbott in 2006 and presently a subsidiary of AbbVie) and a generic company violated federal and state antitrust laws and state unfair and deceptive trade practices and unjust enrichment laws.

Plaintiffs generally seek monetary damages and/or injunctive relief and attorneys' fees.

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Plaintiffs generally seek monetary damages and/or injunctive relief and attorneys’ fees.

In May 2020, Perrigo Company and related entities filed a lawsuit against AbbVie and others, alleging that Abbott’s 2011 AndroGel patent lawsuit filed against Perrigo was sham litigation.

In September 2021, the United States District Court for the District of New Jersey granted AbbVie's motion for judgment on the pleadings in the Perrigo lawsuit, dismissing it with prejudice.

The United States Court of Appeals for the Third Circuit affirmed that dismissal in July 2022 and denied Perrigo’s petition for rehearing in August 2022.

Between March and May 2019, 12 putative class action lawsuits were filed in the United States District Court for the Northern District of Illinois by indirect Humira purchasers, alleging that AbbVie’s settlements with biosimilar manufacturers and AbbVie’s Humira patent portfolio violated state and federal antitrust laws.

The court consolidated these lawsuits as In re:

Humira (Adalimumab) Antitrust Litigation .

In June 2020, the court dismissed the consolidated litigation with prejudice.

In August 2022, the United States Court of Appeals for the Seventh Circuit affirmed that dismissal.

Lawsuits are pending against Forest Laboratories, LLC, an AbbVie subsidiary, and others generally alleging that 2009 and 2010 patent litigation settlements involving Namenda entered into between Forest and generic companies and other conduct by Forest involving Namenda, violated state antitrust, unfair and deceptive trade practices and unjust enrichment laws.

Plaintiffs generally seek monetary damages and/or injunctive relief and attorneys’ fees.

The lawsuits, purported class actions filed by indirect purchasers of Namenda, are consolidated as In re:

In November 2022, the State of Oregon filed a lawsuit in the Multnomah County, Oregon Circuit Court making similar allegations regarding the 2011 patent litigation with one of the generic companies.

Lawsuits were filed against Forest Laboratories, LLC, an AbbVie subsidiary, and others generally alleging that 2009 and 2010 patent litigation settlements involving Namenda entered into between Forest and generic companies, and other conduct by Forest involving Namenda, violated state antitrust, unfair and deceptive trade practices and unjust enrichment laws.

Plaintiffs generally sought monetary damages and/or injunctive relief and attorneys’ fees.

The lawsuits, purported class actions filed by indirect purchasers of Namenda, were consolidated as In re:

Namenda Indirect Purchaser Antitrust Litigation in the United States District Court for the Southern District of New York.

In October 2022, the parties reached an agreement in principle to settle this matter.

Lawsuits are pending against Allergan Inc., an Allergan subsidiary, generally alleging that Allergan’s petitioning to the U.S.

Patent Office and Food and Drug Administration and other conduct by Allergan involving Restasis violated federal and state antitrust laws and state unfair and deceptive trade practices and unjust enrichment laws.

Plaintiffs generally seek monetary damages, injunctive relief and attorneys’ fees.

The lawsuits, certified as a class action filed on behalf of indirect purchasers of Restasis, are consolidated for pre-trial purposes in the United States District Court for the Eastern District of New York under the MDL Rules as In re:

Restasis (Cyclosporine Ophthalmic Emulsion) Antitrust Litigation, MDL No.

In August 2022, the court granted final approval to the parties’ agreement to settle this matter.

Lawsuits are pending against Forest Laboratories, LLC and others generally alleging that 2012 and 2013 patent litigation settlements involving Bystolic with six generic manufacturers violated federal and state antitrust laws and state unfair and deceptive trade practices and unjust enrichment laws.

In March 2023, the parties’ settlement of this matter received final court approval.

Lawsuits were filed against Forest Laboratories, LLC and others generally alleging that 2012 and 2013 patent litigation settlements involving Bystolic with six generic manufacturers violated federal and state antitrust laws and state unfair and deceptive trade practices and unjust enrichment laws.

Plaintiffs generally seek monetary damages and/or injunctive relief and attorneys’ fees.

The lawsuits, purported class actions filed on behalf of direct and indirect purchasers of Bystolic, are consolidated as In re:

The lawsuits, purported class actions filed on behalf of direct and indirect purchasers of Bystolic, were consolidated as In re:

Bystolic Antitrust Litigation in the United States District Court for the Southern District of New York.

In February 2023, the court granted Forest Laboratories’ motion to dismiss the cases, dismissing them with prejudice.

Plaintiffs are appealing the court’s motion to dismiss ruling.

Government Proceedings

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Approximately 3,000 matters are pending against Allergan.

The federal court cases are consolidated for

2022 Form 10-Q |

pre-trial purposes in the United States District Court for the Northern District of Ohio under the MDL rules as In re:

Most of the federal court cases are consolidated for pre-trial purposes in the United States District Court for the Northern District of Ohio under the MDL rules as In re:

National Prescription Opiate Litigation, MDL No.

1 unchanged sentence

The plaintiffs in these cases, which include states, counties, cities, other municipal entities, Native American tribes, union trust funds and other third-party payors, private hospitals and personal injury claimants, generally seek compensatory and punitive damages.

Allergan has previously reached settlements with certain states, counties, and cities.

Allergan is engaged in negotiations with representatives for the remaining states, counties, cities, other municipal entities and Native American tribes regarding a potential settlement, with payments likely to be made over a number of years.

While negotiations are on-going and definitive terms have not been reached, a framework for an agreement exists, including an estimate of a potential settlement amount based on maximum participation in the potential settlement.

In November 2022, Allergan finalized the terms of a settlement with state and local government entities and Native American tribes.

That settlement is subject to certain conditions, including Allergan's determination that a sufficient number of government entities elect to participate in the settlement.

AbbVie recorded a charge of $ 2.1 billion to selling, general and administrative expense in the consolidated statement of earnings in the second quarter of 2022 related to this potential settlement.

In July 2019, the New Mexico Attorney General filed a lawsuit, State of New Mexico ex rel.

AbbVie Inc., et al.

, in New Mexico District Court for Santa Fe County against AbbVie and other companies alleging their marketing of AndroGel violated New Mexico’s Unfair Practices Act.

In October 2020, the state added a claim under the New Mexico False Advertising Act.

In August 2022, the parties finalized their settlement of this matter.

2023 Form 10-Q |

In March 2023, AbbVie Inc.

filed a petition in the United States Tax Court, AbbVie Inc.

and Subsidiaries v.

Commissioner of Internal Revenue .

The petition disputes the Internal Revenue Service determination concerning a $ 572 million income tax benefit recorded in 2014 related to a payment made to a third party for the termination of a proposed business combination.

Shareholder and Securities Litigation

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Similar lawsuits were filed between July 2017 and October 2019 against AbbVie and in some instances its chief executive officer in the same court by additional investment funds.

The court granted motions dismissing the claims of three investment-fund plaintiffs, which they appealed.

One appeal was dismissed with prejudice in August 2021.

In the other two appeals, the Illinois Appellate Court affirmed the dismissal of one in March 2021 and affirmed the dismissal of the other in February 2022.

One of these plaintiffs refiled its lawsuit in the New York Supreme Court for the County of New York, where it was dismissed in November 2020, and that dismissal was affirmed by the Supreme Court of New York, Appellate Division, in January 2022.

In September 2021, the Illinois court granted AbbVie's motion for summary judgment against all remaining plaintiffs on all the remaining claims, dismissing them with prejudice.

Those plaintiffs have appealed the dismissals.

In September 2021, the Illinois court granted AbbVie's motion for summary judgment on all pending claims in all pending cases, dismissing them with prejudice.

In November 2022, the Illinois appellate court affirmed summary judgment in AbbVie's favor and, in December 2022, denied plaintiffs' petition for rehearing.

In March 2023, the Illinois Supreme Court denied the plaintiff’s petition for review.

In October 2018, a federal securities lawsuit, Holwill v.

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In September 2021, the court granted plaintiffs' motion to certify a class.

In May 2022, a shareholder derivative lawsuit, Ranney v.

Gonzalez, et al., was filed in Delaware Chancery Court, alleging that certain AbbVie directors and officers breached their fiduciary duties based on related allegations.

Lawsuits are pending against Allergan and certain of its current and former officers alleging they made misrepresentations and omissions regarding Allergan's textured breast implants.

Lawsuits were filed against Allergan and certain of its former officers alleging they made misrepresentations and omissions regarding Allergan's textured breast implants.

The lawsuits, which were filed by Allergan shareholders, have been consolidated in the United States District Court for the Southern District of New York as In re:

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In September 2021, the court granted plaintiffs' motion to certify a class.

In December 2022, the court granted Allergan's motion for summary judgment on the remaining claims, dismissing them with prejudice.

Plaintiffs are appealing the court's motion to dismiss and summary judgment rulings.

In April 2022, a federal securities lawsuit, Nakata v.

AbbVie Inc., was filed in the United States District Court for the Northern District of Illinois against AbbVie and certain officers alleging misstatements regarding the potential effect that safety information about another company’s product would have on the Food and Drug Administration’s approval and labeling for AbbVie’s Rinvoq.

In February 2023, that lawsuit was voluntarily dismissed without prejudice.

In May and July 2022, two shareholder derivative lawsuits, Treppel Family Trust v.

4 unchanged sentences

Silbersher v.

Allergan Inc., et al.

, was filed in the United States District Court for the Northern District of California against several Allergan entities and others, alleging that their conduct before the U.S.

Allergan Inc., et al., was filed in the United States District Court for the Northern District of California against several Allergan entities and others, alleging that their conduct before the U.S.

Patent Office resulted in false claims for payment being made to federal and state healthcare payors for Namenda XR and Namzaric.

The plaintiff-relator seeks damages and attorneys' fees under the federal False Claims Act and state law analogues.

The federal government and state

2022 Form 10-Q |

governments declined to intervene in the lawsuit.

In August 2022, the United States Court of Appeals reversed the district court’s denial of Allergan’s motion to dismiss the case.

The plaintiff-relator sought damages and attorneys' fees under the federal False Claims Act and state law analogues.

The federal government and state governments declined to intervene in the lawsuit.

In March 2023, the court granted Allergan’s motion to dismiss, dismissing plaintiff-realtor’s federal law claims with prejudice and state law claims without prejudice.

The plaintiff-realtor is appealing the court’s motion to dismiss ruling.

Intellectual Property Litigation

Pharmacyclics LLC, a wholly owned subsidiary of AbbVie, is seeking to enforce its patent rights relating to ibrutinib tablets (a drug Pharmacyclics sells under the trademark Imbruvica).

Cases were filed in the United States District Court for the District of Delaware in March 2019 against Alvogen Pine Brook LLC and Natco Pharma Ltd..

In August 2021, the court issued a decision holding all asserted patents infringed and valid.

The judgment precludes Defendants from obtaining regulatory approval and launching until the last patent expires in 2036.

On August 30, 2021, Defendants appealed.

An appellate hearing occurred in October 2022.

Janssen Biotech, Inc.

which is in a global collaboration with Pharmacyclics concerning the development and marketing of Imbruvica, is the co-plaintiff in these suits.

is seeking to enforce patent rights relating to venetoclax (a drug sold under the trademark Venclexta).

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Three months ended

September 30, Nine months ended

September 30,

(in millions)

2022 2021 2022 2021

Humira United States $ 2,948 $ 3,993

27 unchanged sentences

United States $ 560 $ 427

International 1 —

Total $ 561 $ 427

Duodopa United States $ 25 $ 24

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Ubrelvy United States $ 150 $ 138

Qulipta United States $ 62 $ — $ 106 $ —

Other Neuroscience United States $ 82 $ 166 $ 400 $ 489

International 2 —

Total $ 152 $ 138

Qulipta United States $ 66 $ 11

2023 Form 10-Q |

Three months ended

September 30, Nine months ended

September 30,

(in millions)

2022 2021 2022 2021

Other Neuroscience United States $ 75 $ 173

International 4 4

Total $ 79 $ 177

Ozurdex United States $ 39 $ 33

International 76 74

Total 115 107

Lumigan/Ganfort United States $ 63 $ 67

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements